Recent report shows low cost-effectiveness of AMR-vouchers

A comparative analysis by TLV found that AMR-vouchers, particularly as they are proposed by the European Commission, is the least cost-effective incentive method for new antibiotics development out of three alternatives. This is the conclusion of a TLV report that has analysed the vouchers proposed by the Commission in the recent proposal on new pharmaceutical legislation and compared them to other potential pull incentives.

Last year the European Commission released their Proposal for the Pharmaceutical Regulation. It contained the suggestion of a voucher scheme to incentivise the development of new antibiotics. Since then, these vouchers have been heavily debated in several forums. A substantial part of this debate has centred around if the cost of these vouchers would be justified. However, there has been a lack of studies concerning if the proposed voucher are cost-efficient compared to other potential incentive methods. It’s this lack that a recent report by the Swedish Dental and Pharmaceutical Benefits Agency has sought to address.

– The healthcare and payer communities have largely been sceptical to the vouchers, as we have foreseen that they could cause substantial costs down the line. However, we also recognised the need for new antibiotics and as such we needed to evaluate the vouchers more thoroughly, especially in relation to other potential ways to incentivise the development of new antibiotics, says Agneta Karlsson, Director-General of the TLV.

Compared to market entry rewards and subscriptions, the report shows that vouchers are the least cost-effective incentive method. Especially in the form presented by the Commission, the vouchers lead to high costs of capital for the companies who might want to buy vouchers, decreasing their willingness to pay for them. At the same time, the uncertain pricing of the vouchers mean that investors will demand higher risk-premiums.

In terms of pure cost-effectiveness, the market entry rewards are advantageous because they reduce the efficiency losses due to costs of capital. However, while subscriptions have a cost-effectiveness between vouchers and market entry rewards, the report highlights that they have added benefits that might still make them preferable. Most importantly, they are the only incentive method that can also be used to ensure that the novel antibiotics that they fund are actually made available on the European market.